Fed official worried about recession indicator

A top Federal Reserve official is worried about a warning sign in the bond market.

The yield curve, a measure of short-term and long-term US Treasury bond rates, is flattening as investors prepare for the Fed to raise interest rates to keep the economy from overheating. Some economists fear the curve could tip over and invert if the Fed slams the brakes too quickly.

"I am getting concerned about the flattening yield curve," St. Louis Fed President James Bullard told CNN's Richard Quest on Wednesday. "The inverted yield curve is a powerful predictor of economic downturns."

The curve inverted before the Great Recession a decade ago and before a shorter recession in 2001.